Ministry of Defence

Combat Air Strategy Update

Grant Shapps: The last update to the House on delivery of the Combat Air Strategy was given during Farnborough International Airshow in July of last year. DSEI London has brought the eyes of the world once again to the UK’s world-leading defence capabilities, making this a fitting time to provide a further update on the progress made over the last year. The Government published the Integrated Review Refresh in March, which lays out a strategic approach based on four pillars: shaping the international environment; deterring, defending and competing across all domains; bolstering our national resilience; and securing strategic advantage. The Defence Command Paper 2023 sets out how Defence will help the UK meet these aims through the interlinked objectives of protecting the nation and helping it prosper. With the world becoming increasingly contested and volatile it is clear, now more than at any time in a generation, that strong and capable Combat Air is crucial in enabling the UK to meet its core strategic objectives. It is in this context that RAF fast jets have been conducting an intense schedule of operations and exercises, from eastern Europe to the Middle East, and from the High North to Australia. It was with a keen eye to the UK’s future security and prosperity that in December 2022 we launched the Global Combat Air Programme (GCAP) with Japan and Italy. Operations and exercises Russia’s illegal, full-scale invasion of Ukraine has seen the UK step up its efforts to reassure our NATO allies in eastern Europe. In late 2022, RAF F-35B aircraft deployed on HMS Queen Elizabeth took part in operations with our NATO allies and Joint Expeditionary Force partners above the waters of northern Europe, underscoring our shared commitment to European security. From March to July this year, the RAF led NATO’s Baltic Air Policing mission, intercepting 50 Russian aircraft and flying for a combined total of more than 500 hours. Operating from Ämari Air Base in Estonia, RAF Typhoons conducted Quick Reaction Alert (QRA) intercepts, demonstrating our willingness and ability to defend our allies. Typhoons have continued to operate from RAF Akrotiri in Cyprus and from the Falkland Islands, simultaneously safeguarding our security and projecting UK influence. And of course, RAF Typhoons are on constant standby in the UK itself, to protect our own skies and intercept adversary aircraft when they approach our airspace. Exercises also continue to play a fundamental role in demonstrating our military capability, interoperability with allies and partners, and our shared resolve. Major global deployments have been conducted, with F-35B Lightning aircraft taking part in Exercise Northern Edge in Alaska, and Typhoon playing a key role in Exercise Pitch Black in Australia. Exercises such as these make clear the RAF’s truly global reach and our commitment to Indo-Pacific security. Closer to home, the RAF has taken part in exercises that underline our commitment to Euro-Atlantic security, such as Air Defender in Germany and Tempest Strike/Tower Guardian with Norway and Estonia. In January, Typhoons from RAF Akrotiri exercised with Saudi Arabia, and in March we agreed a Statement of Intent to further strengthen our Combat Air relationship. Across both operations and exercises, the way in which RAF fast jets operate has become fundamentally more agile, with air-to-air refuelling from both home bases and deployed locations, supported by a global network of allies and partners. This has helped the RAF to take part in operations and exercises with over 30 nations over the last twelve months, across Europe, the High North, the Middle East and Indo-Pacific. In addition to evolving how we operate, we continue to invest in our Typhoon and F-35B fleets to keep them ahead of the threat. In July, an £870 million five-year contract was awarded to BAE Systems and Leonardo UK to fit RAF Typhoons with the European Common Radar System (ECRS) Mk2, one the world’s most advanced, sustaining 600 UK engineering jobs in Edinburgh, Luton and Lancashire. Typhoon has already proven its export potential and we are working closely with industry to pursue further exports to close international partners. Meanwhile, the RAF continues to grow its F-35 fleet, with the next key programme milestone being the stand-up of 809 Naval Air Squadron in December. The Global Combat Air Programme (GCAP) In December 2022, the Prime Minister and his Japanese and Italian counterparts launched a partnership to design a next-generation combat aircraft to keep us ahead of the threat well into the second half of the century. We are currently in the early but crucial phases of the programme, developing and assessing concepts for a system with the most advanced capabilities, including machine learning to support human operators, open systems architecture to allow rapid and continual upgrade, and extensive digital networks linking forces across air, land and sea to bolster our overall operational advantage. This is a strategic endeavour in which Japan and Italy are strong partners. Japan, renowned for its industrial base and with a commitment to increasing investment in its self-defence, has invested heavily in advanced combat air R&D, while Italy brings decades of shared experience on the Eurofighter programme. All three partners operate F-35. Progress is well underway, with the UK, Japan and Italy already working together across a range of areas, including concept design, a trilateral engine demonstrator, and advanced on-board electronics to ensure information advantage. The founding partners are open to exploring how others could become involved going forwards, to mutual benefit and aligned to programme schedule. Here in the UK, the Ministry of Defence continues to work closely with BAE Systems, Leonardo UK, Rolls-Royce and MBDA UK, under the Team Tempest partnership. We are delivering at pace and in April awarded BAE Systems, on behalf of Team Tempest industry partners, a £656m contract extension to progress vital concepting and technology work. In July, a £115m contract was awarded to Leonardo UK to develop a Flight Test Aircraft, to be delivered in partnership with 2Excel. Rapid progress is also being made on an advanced flying demonstrator that was announced at Farnborough Airshow last year, with over 150 hours of simulated flight trials and key aerodynamic engine and ejector seat testing undertaken.  This progress is being enabled by the long-term approach to capability delivery outlined in the 2018 Combat Air Strategy, which recognised the vital importance of a strong and sustainable UK combat air sector. MOD has invested over £1.1bn in R&D through the Future Combat Air System Technology Initiative (FCAS TI), with a further £600m from our Team Tempest industry partners to date, delivering advanced industrial technologies such as digital design and additive manufacturing. These technologies are revolutionising how we deliver advanced combat air, driving efficiency and cutting timelines. Looking ahead, the UK has a proposed budget of over £12bn over the next 10 years, alongside robust funding from Japan and Italy. Funding requirements will continue to be refined as the programme matures. In addition to investing in advanced industrial technologies, we are continually working to develop the skills base needed to succeed, now and in the future. The number of skilled people working on the programme is growing quickly, with approximately 3,000 across the UK’s Team Tempest partners, in major combat air hubs including the south-west and north-west of England and Edinburgh. We recognise that today’s students are tomorrow’s lead engineers, which is why we are reaching out to schools and universities, recruiting graduates and apprentices, and propelling them into long-term STEM careers while continuing to attract mature talent. Next steps  UK Combat Air will remain crucial for our security and prosperity and that of our allies and partners, both on NATO’s borders with Russia and in the wider world. The RAF will continue to exercise its global reach, conducting operations and exercises from the Euro-Atlantic to the Indo-Pacific. We will continue to invest in our Typhoon and F-35 fleets. On GCAP, we are working intensively with Japan and Italy to establish the core platform concept and the joint structures needed to launch the development phase in 2025, targeting entry into service in 2035.

The Defence Industry and Environmental, Social and Governance Considerations

Grant Shapps: I wish to make a joint statement with HM Treasury, on behalf of His Majesty’s Government. The Government is clear the UK’s defence sector has an integral role in supporting the first duty of government: to promote and protect the United Kingdom’s core national interests: the sovereignty, security and prosperity of the British people. That includes supporting allies and partners and contributing to broader international security. Nowhere is this clearer than in Ukraine - where we continue to have a leading role in providing our Ukrainian friends with our support and with vital military aid to resist President Putin’s illegal and brutal war.Our defence industrial base underpins our Armed Forces, maintains our continuous-at-sea nuclear deterrent, and safeguards our critical infrastructure. The private sector is essential to our national security whether in peacetime or times of emergency. The ongoing maintenance of critical industrial facilities, skills, and intellectual property onshore, and the approach we take to sustain these, gives us confidence that we can continue to operate independently, in defence of the country’s interests, without external political influence and protecting the sensitive technologies that underpin our military capability. Despite this, defence companies are being excluded from access to debt and equity capital, citing Environmental, Social and Governance (ESG) grounds. This not only threatens an important part of the economy that, through MOD expenditure alone, directly and indirectly supports over 200,000 jobs, but it fails to recognise that the UK’s defence industry is essential to protecting our way of life. Such divestment also threatens to increase the cost of procurement, diverting taxpayers’ money away from other defence spending and from public services. The industry’s value to us as a key strategic asset is only increasing at a time of global uncertainty. As outlined in the Defence Command Paper Refresh, this Government asserts that there is nothing contradictory between the principles within ESG and the defence industry. On the contrary, a strong national defence, including our nuclear deterrent, is a pre-requisite for the freedoms (including social liberties) which we often take for granted, and the aspirations that investors and financial services companies seek to address using ESG considerations.As stated in the Green Finance Strategy published this Spring, the Government believes that continued private investment in the UK defence industry and its NATO allies is essential to protect the UK national interest, the UK economy and broader environmental and social goals. Moreover, the UK defence sector has reflected ESG considerations in a range of ways. Industry is driving innovation in new technologies to improve sustainability and companies are embedding ESG metrics into their remuneration structures. Additionally, defence companies are exploring how to raise standards across the board, improve access to information and communicate the positive vision of what they are achieving on these subjects. Whilst investors must always be free to make their own choices, they should do so on the basis of the facts, and those seeking to inform those choices through providing ESG ratings should be clearer on their methodology and more prompt to correct errors when these are pointed out. Defence spending helps prevent war and helps support the British way of life, and those of our NATO allies and partners. MOD is showing leadership itself on the environmental and social agenda, including the application of the Social Value Model within MOD’s procurement process; we are focused on tackling economic disparities, tackling climate change and promoting equal opportunity. Through the Defence Suppliers Forum, we are working with industry at a strategic level to build sustainability into defence supply chains and tackle greenhouse gas emissions reduction. Crucially, HM Treasury has also published a consultation on a potential regulatory framework for ESG ratings providers with the aim of improving transparency and promoting good conduct in the ESG ratings business. The Government will, with our industrial partners, continue to explore and champion the wider environmental and social benefit of the defence sector and ensure it continues to represent the highest standards of corporate governance. The Economic Secretary (my Hon Friend, the Member for Arundel and South Downs) and I will continue to engage with defence companies and the financial sector on access to investment and financial services for industries critical to our national security.This Government believes that the important values within ESG should not undermine capabilities developed to help us preserve peace and security, without which sustaining those values would not be possible.

Department for Business and Trade

Insolvency Practitioner regulation reform

Kevin Hollinrake: The Government has today published its response to its consultation ‘The Future of Insolvency Regulation’, which was published in December 2021. This consultation was open for 13 weeks and outlined proposals for significant reform to the regulatory framework for Insolvency Practitioners.The insolvency profession plays a key role in driving economic growth and supporting those in financial distress. The unique responsibilities that Insolvency Practitioners bear and the decisions they take help save jobs and businesses, and deliver a fair, effective and orderly winding up to deal with financial failure where that is not possible. The vast majority of Insolvency Practitioners do a good job in challenging circumstances, but there continue to be instances of poor conduct that directly impact those closely involved. This tarnishes the reputation of the whole profession and undermines confidence. Insolvency Practitioners should be regulated within a modern framework that reflects the way the insolvency sector has developed since formal insolvency regulation was first introduced in 1986.The Government received 102 detailed responses to the consultation. Officials also obtained further relevant evidence through targeted stakeholder engagement. Most proposals received significant support amongst a broad range of stakeholders. We are grateful for the views and evidence provided as part of the consultation process, which has informed the package of reforms we will take forward when Parliamentary time allows. This most notably includes:challenging the current four professional body regulators to deliver significant and measurable improvements to the quality of regulation through non-legislative means, whilst keeping options to replace the current regulatory model with a single regulator of Insolvency Practitioners under reviewexpanding regulation to include firms providing insolvency services, alongside the existing regulation of individual Insolvency Practitionersreforming the way ethical and professional standards for the profession are setintroducing a public register of authorised Insolvency Practitioners and firms providing insolvency services, that will include relevant and proportionate regulatory informationdeveloping and consulting on proposals to introduce a compensation/redress scheme for those affected by an Insolvency Practitioner’s acts or omissionsstrengthening the bonding framework, which requires Insolvency Practitioners to hold security in the event of their fraud or dishonestyThe Government’s response to the consultation reaffirms its commitment to ensuring the insolvency profession is effectively and robustly regulated, with a regulatory framework fit for the future. These reforms, which represent the biggest change to the regulatory framework in nearly 40 years, will address weaknesses with the current regulatory framework, modernise the regime and increase public confidence in regulation.A copy of the consultation response may be found online at:https://www.gov.uk/government/consultations/the-future-of-insolvency-regulation